HECM Reverse Mortgage: What Married Couples Need To Know!

11/24/2016

For couples who are considering HECM reverse mortgage for their retirement, they must be fully aware of the different rules that come with this mortgage solution. They are designed to provide peace of mind to married couples who are planning to take these loans as they assure the homeowners about that extra income, which they will be receiving in their retirement years. This means they are relieved from the burden of their day to day expenses and should not worry even if there are no savings. It is only when the borrower dies, sells or moves out of the home that this Hawaii reverse mortgage must be repaid.

Since nothing comes easy so this HECM reverse mortgage too has its set of problems. There were cases where husbands have taken the reverse mortgage and it was their wives who faced foreclosure due to non-payment of the loans after their spouses died. This was a clear case of women protection and the concept of reverse mortgage totally failed here. It was after this only new rules were introduced that were aimed at making things easier for both the partners.

So, the new rules were kicked on Aug 4, 2014, for making HECM reverse mortgage a better experience for married couples.According to rule 1:

• If one spouse takes a reverse mortgage and then dies, another one can continue to live in that house without worrying about foreclosure as long as he or she continues to pay the tax and insurance and is keeping the house well maintained. This step of HUD was highly appreciated as it proved as a blessing for the most vulnerable seniors, who are now well protected and can stay at their place as they like.

• The addition of this new rule gave rise to another important Hawaii reverse mortgage question, which stated, what will the HECM reverse mortgage be like when one spouse is not yet 62? Well, the answer was, the couple can get a reverse mortgage in this case too. But, the size of a married couple's payout will be based on the age of younger spouse, even if that person is not on the mortgage's title. This means younger the person is, the smaller is the loan he or she will get. In this way, the new rule will have a lesser risk for both lenders and non-borrowing spouses.

As there are pros and cons of everything so this new rule too gave birth to some negatives. After this new rule got introduced many couples put just one of their names on a reverse mortgage. This was done to maximize the draw on a reverse mortgage because a spouse less than 62 is subjected to lesser loan as per the rule and by not revealing that on the loan contract they would get a bigger loan, which is shady and should be prevented.

Must Read : Mortgage Solutions: Why You Must Consider It For Your Retirement

On the whole, the new rules are added with an intention to strengthen the HECM reverse mortgage as a great financial planning tool. So, one must opt for it after thorough advice from a professional.

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